Strutt & Parker has announced that it has revised down its 2019 outlook for Prime Central London – forecasting 2.0% growth as a best case and -5.0% on the downside. The regional UK forecast remains the same at 2.5% for 2019.
Vanessa Hale, Director, Research at Strutt & Parker explains: “As the year has gone on and the economic uncertainty has continued, we expect to see stagnant prices or further negative growth in the final stage of 2018. There is the possibility of price decreases continuing into 2019 as both globally and domestically the economic and political environments remain volatile.”
According to the Nationwide House Price Index, UK property prices grew 2.1% in the year to Q3 2018. Despite historically having the strong growth rate in the UK, London now continues to show weak growth. In Q3 2018, the North had the lowest growth (-1.7%) with London registering the second lowest growth (-0.6%). Nationally, house prices are now 16.7% above their pre-crisis peak and London prices are 53.9% above their pre-crisis peak. Four regions remain below their pre-crisis peaks: Northern Ireland (-39.2%), Scotland (-2.5%), Wales (-1.2%) and the North (-6.7%).
Total transaction levels for England and Wales are relatively equivalent to this time last year. In the prime country property market, the largest numbers of detached homes sold over £2 million, excluding Greater London, continued to the be in the South East and the East of England for 2018. The South West, North West and West Midlands rounded made up the rest of the top five for the largest number of transactions for homes sold over £2 million, compared to 2017.
Guy Robinson, Head of Residential Agency at Strutt & Parker, had this to say: “As we move through autumn, we have recorded a steady performance. Transaction levels across the country have been encouraging in comparison to last year and the number of registered buyers is gradually increasing, as are the viewing numbers, outstripping 2017. Homebuyers are no longer using the uncertain political climate as a reason to sit on their hands and those who need to make a move are serious about selling which is keeping the market in motion.”
In PCL, overall transaction levels have seen a -1.8% decrease compared to Q3 2017. This overall decrease masks the fact that the sub £2million and the over £5million brackets experienced 0.8% and 11.8% (respectively) quarter-on-quarter increases in transaction volumes. Prime Central London continues to attract overseas purchasers albeit at slightly lower level than historically.
Charlie Willis, Head of London Residential Agency at Strutt & Parker: “The PCL market continued to tick over throughout the summer months and August was a particularly good month for us in terms of transactions. Keenly priced properties are generating the most interest as sophisticated buyers who understand the long term strength of the London market are still out there. Nevertheless, the growing number of hoops to jump through for compliance and the overall conveyancing processes are causing properties to take longer to exchange.”
Mark Dorman, Head of London Residential Development & Investment at Strutt & Parker, observes: “We are seeing the most activity at opposite ends of the spectrum. As a general rule, we are seeing a growing importance on completed stock from buyers who want to see the quality and environment of a property first hand before making an offer. On the flipside, some experienced buyers are taking advantage of the opportunity to buy off-plan in the very early stages of a scheme, two years or more ahead of development completion. It's a market of two extremes when it comes to price too. At the lower end, anything up to £1300 per sq ft is appealing to the market, whilst properties at the very high end priced £15 million and above are also transacting. The vast majority of properties in the middle, priced from anywhere from £2m - £10m, are proving less popular and volumes remain low.”
In the lettings market, the take-up of new rental tenancies across PCL decreased by 12.7% in Q3 2018 compared to the same period last year and is down 22.1% on the five-year average for the third quarter.
Kate Eales, Head of Residential Lettings at Strutt & Parker said: “We are seeing people renting out properties because they haven't been able to sell them, or moving into rental accommodation temporarily because they have found a buyer for their house and don't want to lose them. The PCL market is 18 months to two years ahead of the rest of the UK's rental market and properties that went to the lettings market have now gone back on the sales market which is moving again, with adjusted prices. Over the next few months, I think we will start to see rental prices go up slightly in central London for the first time in 24 months as stock levels tighten, alongside the impact of the tenant fee ban which will be introduced in April 2019.”
According to UK Finance, there were 6,000 new buy-to-let house purchase mortgages completed in August 2018 (most recent data released) showing a year-on-year decline of 13.0%. Overall, the Buy-to-Let market looks to be relatively stable, albeit with subdued levels of new uptake, due in part to the impact of recent legislative and tax changes.
